Bank sale concerns

Some Westpac Cook Islands customers say they are considering cancelling their accounts, following last week’s announcement that the bank’s Cook Islands operations will be sold to Bank of South Pacific Limited.

Westpac Banking Corp said on Thursday it had agreed to sell its banking operations in five Pacific Island nations to the Bank of South Pacific Ltd (BSP) for $125 million to concentrate on its largest markets in the region – Fiji and Papua New Guinea.

Westpac said the sale of the businesses in Samoa, Cook Islands, Solomon Islands, Vanuatu and Tonga would be completed in mid-2015, subject to regulatory approval.

Customers who contacted CINews about the sale said they were worried about the stability of the Papua New Guinea-based BSP, and concerned that it would not give the same access to New Zealand and Australian accounts as Westpac had.

“I believe PNG is one of the most corrupt countries in the world – corruption is endemic,” one customer, who asked not to be named, said.

“It is hard to see how customers here would have the same level of confidence in PNG’s prudential oversight of BSP and a recent report on the bank notes it has a ‘high risk economic and operating environment’ and ‘vulnerability to erosion of confidence in PNG.”

Another customer said leaving aside the issues about stability, the sale raised issues about a lack of connectivity by SPB with a New Zealand and Australian branch network.

“Many local businesses have NZ bank accounts used to conduct business. So many Westpac commercial customers would likewise have Westpac NZ accounts.”

However, a BSP customer who spoke to CINews described the bank as one of PNG’s most profitable companies.

“It is listed on the PNG Stock Exchange, but I guess the main complaint in PNG I see from the media and social media is the number of fees they charge for all sorts of things.”

Westpac Pacific finance manager Nicholas Rous said the bank had performed an assessment on BSP’s strategy, vision and operation and considered, as the largest Pacific-originated bank, it was well positioned to ensure a sustainable future for Westpac’s banking business in the Cook Islands.

“Our decision was the result of a detailed and disciplined assessment which included an assessment of cultural fit and alignment with strategy. BSP represents a good cultural fit for Westpac Cook Islands,” he said.

“Westpac Cook Islands will continue to manage operations as business as usual until the completion of sale, which is expected to be in mid-2015.

“Subject to the parties obtaining necessary statutory, regulatory and third party approvals the sale will be completed and Westpac’s operations in the five countries will be owned by BSP.”

Westpac would provide a number of services for an additional period, with the aim of minimising any impact from the sale upon customers and ensuring a seamless transition for employees, customers and local communities, he said.